New York Arbitration Convention

In 1958, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards or the New York Arbitration Convention was concluded. This Convention provides a legal frame in international arbitration, and 166 countries have signed it, between them The United Arab Emirates with Federal Decree Number 43 of 2006. the last State to enter the Convention was Sierra Leone on 28 October 2020. The Federal Arbitration act of the United States of America incorporates the New York Convention. About the history, the International Chamber of Commerce (ICC) in 1953 shaped the first draft of the Convention to United Nations Economic and Social Council because they were unsatisfied with the Geneva Protocol on Arbitration Clauses (1923) and the Geneva Convention on the Execution of Foreign Arbitral Awards (1927). The draft was discussed during a United Nations conference in 1958 establishing the New York Arbitration Convention and entered to force on 7 June 1959. Article 7(2) stated the cessation of the Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 because they were replaced by the New York Arbitration Convention. With the growth of international arbitration, the New York Arbitration Convention offers mutual legislative standards for the appreciation of arbitration agreements and court recognition and enforcement of foreign and non-domestic arbitral awards. This Convention is open to agreement by any member State of the United Nations, any other State which is a member of any specialized agency of the UN.

Arbitration is a non-Court alternative system of resolving disputes, where an arbitrator or panel of Arbitrator is agreed by the parties to make a compulsory decision and the New York Arbitration Convention facilitates the recognition and enforcement of foreign arbitral awards. In the future, will assure the continued growth of international arbitration and general conditions in which border economic exchanges can flourish. Nevertheless, what is an arbitral award? An arbitral award is the final and binding decision made by an arbitrator or an arbitral tribunal, which resolves a dispute. Article 3 of New York Arbitration Convention mentioned that “each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following article”, in other words, foreign arbitral awards are considered “prima facie” in the recognition and enforcement in the contracting States. This Article guarantees freedom to the Contracting States to apply their own national rules of procedure at the recognition and enforcement stage. Additional, Article 6 mentioned that “if an application for the setting aside or suspension of the award has been made to a competent authority referred to in article 5(1)(E), the authority before which the awards is sought to be relied upon may, if it considers it proper, adjourn the decision on the enforcement of the award”, this Article allows national courts to adjourn their decision on enforcement should they “consider it proper.”

The New York Arbitration Convention and the Enforcement of a Foreign Arbitral Award in UAE

With the Federal Decree, Number 43 of 2006 was adopted the New York Arbitration Convention in UAE and Articles 235 and 236 of the UAE Civil Procedure Code about the execution of foreign judgments make it impossible to enforce any foreign arbitral award if the UAE courts have jurisdiction to look into the dispute in the absence of an arbitration agreement. However, the UAE legal system established that the international treaty should surpass the UAE laws, in a contradiction between an internal law and an international treaty. In other words, the New York Arbitration Convention has supremacy over articles 235 and 236 of the UAE Civil Procedures Law. For example, in a ruling dated 12 January 2011, the Dubai Court of First instance enforced two arbitrations awards, issued by a Sole arbitrator in London under the DIFC-LCIA Arbitration Rules, however the award debtor object to the enforcement of the awards, for the following reasons: formation of the arbitral tribunal invalidate, Failure on oath-taking for witness by the arbitral tribunal, among others. Nevertheless, the Dubai Court of First Instance rejected the application of article 235-236 of the UAE Civil Procedure Code. This significant advance shows the supremacy of the New York Arbitration convention under the Internal laws. Another example, was in the Fujairah Federal Court of the first instance, in a ruling of 27 April 2010 (Case Number 35/2010) was enforce two awards, delivered by a Sole Arbitrator in London under the Rules of the London Maritime Arbitration Association (LMAA), this is a clear sample of the supremacy of the New York Arbitration Convention. If you have any queries regarding the arbitration laws in UAE you can reach out to arbitration lawyers at Fotis International Law Firm